1. With the aid of diagrams, explain the impact of migration on competitive equilibrium in the labour markets of two regions, Southern and Northern Ghana, assuming that the South has a higher wage than the North.

2. Ghana and Cote d'Ivoire are the world's leading exporters of cocoa, which are grown and harvested by a large labour force that includes many children. Assume Ghana and Cote d'Ivoire now outlaws the use of child labour on cocoa farms and the law is properly enforced. Using economic theory and with the aid of diagrams, analyze what would happen to employment and wages in the cocoa farming industry. Use supply and demand curves in your analysis.

3. Consider two workers with identical preferences, Paapa and Ben. Both workers have the same life cycle wage path in that they face the same wage at every age, and they know what their future wages will be. Leisure and consumption are both normal goods.

a. Compare the life cycle path of hours of work between the two workers if Ben receives a one- time, unexpected inheritance at the age of 35.

b. Compare the life cycle path of hours of work between the two workers if Ben had always known he would receive (and, in fact, does receive) a one-time inheritance at the age of 35.

4. Assume that you are 18 years old and deciding whether to go to university or start working. If you work, you will earn a constant wage WHS throughout your career. If you study, you pay tuition for four years and then earn a constant wage WUNI.

a. Show the condition under which you will choose to study.

b. Explain how changes in tuition, interest rate, and wage differential (WUNI - WHS) would

affect your decision.

5. Rhoda's preferences for consumption and leisure can be expressed as U(C, L) = (C - 100) (L - 40). There are 110 (non-sleeping) hours in the week available to split between work and leisure. Rhoda earns $10 per hour after taxes. She also receives $320 worth of support from her parents each week regardless of how much she works.

a. What will be Rhoda's marginal utility of leisure and her marginal utility of consumption?

b. What is Rhoda's marginal rate of substitution when L = 100 and she is on her budget line?

c. Find Rhoda's optimal amount of consumption.